Lord Adonis has called for Transport Secretary Chris Grayling to quit over his handling of the East Coast rail franchise as the fallout from the peer’s resignation as infrastructure tsar continued.
The Labour peer quit in protest at Theresa May’s handling of Brexit, but also lashed out at what he views as a taxpayer-funded bailout allowing Virgin Trains East Coast to walk away from its franchise three years early.
He has claimed the East Coast decision is evidence that Whitehall is too distracted by the impact of Brexit to focus on running the country.
Former transport secretary Lord Adonis resigned as chairman of the National Infrastructure Commission on Friday, claiming the Prime Minister had sided with Ukip and the “Tory hard right” over her Brexit plans to leave the EU’s single market and customs union.
But he also said he would have been compelled to quit over the East Coast row.
Virgin Trains East Coast, a partnership between Stagecoach and Sir Richard Branson’s Virgin, had previously agreed to pay the Government £3.3 billion to run the service until 2023 but has been allowed to walk away three years early.
A new East Coast Partnership will take on responsibility for both intercity trains and track operations on the route in 2020.
“Handing a cheque worth hundreds of millions of pounds to Richard Branson and (Stagecoach chairman) Brian Souter would be indefensible at the best of times but we are now at the worst of times with a Brexit squeeze on the public finances and with rail fares going through the roof,” Lord Adonis told The Observer.
“The cost of this bailout is going to be a slashing of the national infrastructure programme and even bigger fare rises – and as that becomes apparent in Parliament and in the media I think Chris Grayling’s position is going to become untenable.
“It is of a piece with him being a radical Brexiter to whom everything is subordinate to hard-right ideology.”
In his resignation letter, Lord Adonis told Mrs May: “The only rationale I can discern for the bailout is as a cynical political manoeuvre by Chris Grayling, a hard right Brexiteer, to avoid following my 2009 precedent when National Express defaulted on its obligations to the state for the same East Coast franchise because it too had overbid for the contract.
“I set up a successful public operator to take over East Coast services and banned National Express from bidding for new contracts. The same should have been done in this case.”
Allies of the Prime Minister appeared unconcerned by Lord Adonis’s decision to quit, suggesting he had jumped before he was pushed.
Lord Adonis urged other senior figures to follow his lead in speaking out about the Government’s approach to Brexit.
He told BBC Radio 4’s Today programme: “I don’t believe the Brexit policy is sustainable and I believe that people like me who have a leadership position should be out there next year arguing passionately with the British people as to why staying in the EU is the right thing to do, alongside sorting out the deep social crisis which Britain is now in the midst of, which I think is a good part of the reason why Brexit started in the first place.”
Lord Adonis said the 17.4 million voters who backed Brexit in the referendum were “absolutely entitled to their view” but “I’m absolutely entitled, indeed I believe it’s my duty, to say why I think that was wrong”.
“Very few of the people who voted for Brexit voted, I believe, to make themselves poorer,” he said.
“Wrenching Britain out of our key trading and international alliances is likely to make us poorer.”
A Department for Transport spokesman said: “No-one is getting a bailout and Virgin Stagecoach will continue to meet its financial commitments made on the East Coast rail franchise to the taxpayer as it has done since 2015.
“Stagecoach has also – on average – paid 20% more back to the taxpayer than when the line was operated by Directly Operated Rail and we continue to receive hundreds of millions of pounds.
“The decision to bring in a partnership to run the service from 2020 is to ensure the train companies work more closely with those responsible for the infrastructure, like the track and signalling, to help improve the service for passengers.”
Liberal Democrat Leader Sir Vince Cable said Lord Adonis had delivered a “lethal criticism of the Transport Secretary’s mishandling of rail franchises”.
“It would appear that the Government is handing out millions of pounds in subsidy to Virgin Rail and Stagecoach for failing to meet their financial objectives,” he said.
“This makes a complete mockery of the entire principle of rail franchising, that companies compete and take a hit if they miscalculate the market and don’t get their sums right. It’s difficult to see how Mr Grayling can survive if Lord Adonis’ accusations are correct.”